Ever wonder what sort of legal trouble would be in store for Kickstarter if the upstart platform decided to terminate service for a user in the midst of a big fund-raising campaign? Wonder no longer because the subject is front-and-center in a pending court dispute.

The plaintiffs in the case are Kristen “M.K.” Ducote and her husband and professional race car driver, Chapman Ducote. M.K. is the author of a book entitled Naked Paddock about life, love and drama in the world of professional motorsports. At the end of 2012, the Ducotes decided to use Kickstarter’s platform to raise funds they say were needed to publish the book.

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But in January, after Kickstarter approved the initial project, and five days after it launched on the site, Kickstarter allegedly hit the breaks.

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“The unexpected and unexplained actions by Kickstarter in suspending the Project on the website at the same time the Kardashian appearances were occurring on television was an unexpected and huge shock,” said the lawsuit first filed in Florida state court in April. “It is almost as if Kickstarter decided to pull the plug at the exact moment they knew MK, Ducote and [their publisher] War Chest needed them the most.”

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The lawsuit is premised on the theory that Kickstarter holds itself out as a successful innovator in the field of crowd funding with advertisements that state that $500 million has been pledged to more than 3 million people for over 35,000 projects.

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But Kickstarter also gives reasons why it believes the lawsuit fails.

First, the popular crowd-funding platform points to its Terms of Use, which states that “Kickstarter reserves the right to reject, cancel, interrupt, remove, or suspend a campaign at any time and for any reason.”

It doesn’t say. It looks like they haven’t got a statement from Kickstarter, just their legal defense.

I may be something complicated, like the huge publicity triggered a situation Kickstarter was unprepared for behind the scenes, and they pulled the plug to protect themselves. Or it could be as simple as the system flagged the pattern of contributions as “suspicious” and they shut it down — the way it has happened with PayPal when an emergency charity campaign triggers their “scam alert” sensors.

The difference is that Paypal actually has to make good and acknowledge it. Kickstarter, since it doesn’t collect the money until later, perhaps doesn’t feel it has to do anything.

In the US, so long as nobody is coerced to enter into a contract or the contract is not for something illegal (like an assassination), the terms the parties agree on are usually going to be enforced.

Click-through contracts like Kickstarter’s are sometimes subject to closer scrutiny, but I’d bet on Kickstarter’s side of the case in court. The case might be different if Kickstarter charged a large listing fee or something like that.

I’m having a hard time equating a project no one wanted to donate to (even if it was only up for five days) with $1 million in lost sales. When I released my first novel last year should I have set the expectations bar at $1 million? I failed pretty miserably, if so.

I love this part from the complaint:

“MK, Ducote and War Chest have incurred damages for the cost and expenses for writing the novel, and lost profits due to their inability to publish the novel.”

Anyone who seriously tries to claim they are owed for their expenses to write a novel needs a clue in a hurry. And her husband is a race car driver who couldn’t scrape a few ducats together to finance a cover and a freelance editor for his wife’s book?

I doubt this will ever get to court, but I wish it would, just so a judge could laugh them out of it.

They wouldn’t be able to sue if the project didn’t fund, so what makes them think that they get to claim those losses if the project was shut-down before funding? It sounds like someone who wants to make a quick buck off of a new, hot target.

Talking Kickstarter, PG you might like to do a whole post on the amazing results Patrick Rothfuss is having making a playing card deck of the characters from his wonderful book The Name of the Wind (get this book! It’s so good)

Do they really need a Kickstarter campaign to publish a book? I publish e-books for under $100 usually, and I can simply drop the file into Createspace and have physical copies made…maybe I’m missing something here.

Keep in mind, I still play video games and donate to my favorite Kickstarter game development projects, and even an independent film once that I would love to see made the ‘right’ way instead of the ‘Hollywood’ way.

I agree. I think Kickstarter’s Terms & Conditions are egregious and constitute unfair business practices…

Kickstarter should only be able to suspend a project for a reason, even if it’s an average reason or a suspected reason. From MK’s complaint it seems Kickstarter gave M.K. no notice of their intent to suspend her account, no chance to cure whatever the problem was and absolute no reason for the suspension.

Just look at Kickstarter’s response. They didn’t say MK violated a term or condition, but said their T&Cs allow them to do whatever they want and suspend an account for any or no reason. With MK and her husband directing so much valuable traffic to the Kickstarter site with their television appearances, maybe MK does have a good case that Kickstarter was unjustly enriched after acting in bad faith.

Look at PayPal. Enough people have sued over their crazy policy that allows them to freeze accounts without explaining why, that they’ve finally had to address the problem: http://money.cnn.com/2013/01/21/technology/paypal-frozen-funds/index.html Kickstarter needs to get with it. I give MK credit for taking up the flag for the rest of us. Kickstarter is making millions of dollars from the donations of people on their site, and they should be accountable. Am I the only one who thinks they owe us a duty to be transparent and fair?

I work at a gym. In our membership agreements, that people sign up front, is a clause similar to the Kickstarter one. We can cancel the membership at any time for no given reason. I’ve no clue if its been tested in court here in Canada though. It’s only been used a couple times that I know of at our location. The guy masterbating in the pool for example. I doubt we have a specific rule on the books forbiding that, so the blanket clause covers it.